Subdued start to the week for FTSE
Fiona Cincotta April 23, 2018 9:53 AM
Despite Wall Street closing a solid 0.8% lower at the end of last week and mixed trading in Asia overnight, the FTSE stumbled out of the blocks on Monday in a subdued start to the week. Some geopolitical developments over the weekend, including a further easing of fears of a US china trade war and North Korea agreeing to suspend missile testing and close a nuclear site failed to lift sentiment as much as might have been expected.
Despite Wall Street closing a solid 0.8% lower at the end of last week and mixed trading in Asia overnight, the FTSE stumbled out of the blocks on Monday in a subdued start to the week.
Some geopolitical developments over the weekend, including a further easing of fears of a US china trade war and North Korea agreeing to suspend missile testing and close a nuclear site failed to lift sentiment as much as might have been expected.
Commodity stocks are dominating the upper reaches of the FTSE, with miners tracing metal prices higher and oil majors buoyed by oil prices.
Brent, although softer on data showing an increase in US oil production, remains up some 9% over the past two weeks.
Costa spin of talk boosts WhitBread
WhitBread has jumped to the top of the FTSE, ahead of reporting on Wednesday and as break up speculation shows no signs of abating; optimism continues to grow that the firm is becoming more receptive to the idea of spinning off Costa Coffee division from the Premier Inn and restaurant division.
Investors are hoping that full year results this Wednesday will help offer some clarity as to the intended future path of the coffee and hotel divisions at Whitbread.
This is becoming more of a when, not if, question hanging over the firm.
Capita Rights Issue well received
It’s rare that the city is as pleased to see a rights issue as it was this morning when troubled outsourcer Capita announced a share issue to raise $701 million.
The deeply discounted but fully underwritten share issue comes after the firm announced a £513 million loss for the previous year as it struggles to repair its balance sheet and recover from a series of profit warnings and contract issues.
Capita is issuing 1 million new shares in a three for two rights issue, at 70p per share, a 34% discount to the theoretical post rights issue price.
Shares in Capita are up a massive 13% in early trade as traders cheer the news of the rights issue and the fact that steps are being taken to reduce crippling net debts of £1.2 billion and to fund the current restructuring programme.
The fact that this issue is fully underwritten and being well received is encouraging news for Capita whose shares are down 70% over the past year.
This could be the injection that is needed to see the hobbling giant turnaround.
Rising yields to drag US indices lower again?
Over in the US, rising yields are once again impacting on trade – pushing the dollar higher and weighing on sentiment for US equity indices.
US futures are pointing to a negative start to trading whilst the US dollar remains at a 5-week high versus the pound.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.